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Friday, November 20, 2009
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79 comments:
WSJ on walk-aways
Guess who's walking away? People who's age would have normally made them renters anyway, who put zero money down (and hence were basically renting from the bank) and for whom switching back to a cheaper rental is no hardship.
Hooocooda guessed?
Missed the thread yesterday, but wanted to say congrats to Cara! Definitely sounds like you've made a smart decision.
And good article.
Comment from that article:
I’m an early 30s professional who moved to florida during the boom. I bought a home in mid 2007. I actually put down nearly 10% downpayment and got a fixed rate, and did not overstretch my budget. Timing is everything. I am now over upside down on my loan by at least $130,000 (the number still shocks me) and my neighborhood is deteriorating big time with crime on the rise and crappy schools. The house needs numerous repairs as well. My significant other is not a homeowner, thankfully. I am in the process of short sale and walking if that fails.
I love the line, "My significant other is not a homeowner, thankfully." Probably didn't hear that very often a couple years ago. :)
Cara-
Good article. I would also add that young people are walking away, because all of them bought at the peak of the bubble and had no move up equity. For the older generations many of them already owned a home so they are not as far underwater in addition to having more community ties.
housebuyer,
You definitely do have the problem, that by definition almost anyone under 30 who owns now, bought during the bubble, unless they're 29 now and bought before the age of 23.
(condo's didn't rise much until 2004, so many 03 buyers of condos aren't underwater yet despite the precipitous drops)
Cara said - The way stuff under $330k is selling right now (purely THs) if this neighborhood ever dips that low, holy macarel will it ever whip back up to $400k fast enough to make your head spin.
I wouldn't count on it. This is what caused the bubble in the first place. People seem to forget that home prices only see modest yearly increases in general - if even that. Here you are talking about remaining bubble that needs to burst and the flat prices for few years after that...
Lot of sales are currently being driven by helping hands of FHA, government and investors - they do not represent the realities.
It is becoming clear more and more that economy will go into double dip - when that happens, all bets are lost for housing - and yes this area is NOT immune.
spider,
Much of my answer is in the other bucket, since you put this in two places.
That what people want is a SFH is a reality. That anything under 350k is affordable right now to households making the local median income with ZERO down is a reality. That the Fed funds rate is likely to stay near zero until 2011/2012 is a reality.
A double dip recession for the nation is possible, and indeed could impact here. In fact, I'd say it's the only thing that stands a chance of bringing house prices down another significant notch.
But I'd put it this way, I think the chance that areas that have already gone down over 35% since peak, and are still down over 25%? Have only about a 10% risk of falling back to their lows or past them, without subsequently quickly recovering to current levels within a year. However, I'd put the chance that prices fall at least a little from here at 80%, and put only a 2% chance that prices rise from here on a real basis within the next 3-5 years.
Cara - I responded in the other thread....yes, I ended up putting it in two places when I saw the new bucket for today...
Congrats to you on the home, I know it is very exciting time for you and the family.
spider,
Thanks. Sorry if I got defensive or let my personal enthusiasm get away with me.
The article is also a bit questionable when it dips its toe into comparing today's attitudes versus those of years ago, implying that people today aren't as moral or ethical.
While that may or may not be true, the article isn't comparing apples to apples. Rarely if ever have people alive today faced the dramatic downturn following a dramatic bubble (including easy credit) until the current one. So we didn't have massive #s of people who were significantly underwater before. In the past there were far fewer people who were underwater and if they were it was only by a small amount, and people might have expected prices to edge their way upward, if they could just hold out a bit longer, as the recession wasn't as deep or prolonged.
So I would bet you that if the same thing happened to my generation or my parents' generation, similar proportions of people would have walked away.
Ace-
I am pretty sure housing prices fell by as much in the great depression. There are also local examples of housing falling this much. I think the most prominent examples are in oil downs when oil dried up. I don't know if people walked away or not, but examples do exist. The thing that is so unusual about this time is how widespread the collapse is.
Cara, shocker! For those that think foreclosures are the cause of this mess and should be stopped, consider how painless it is for these people to let go of their homes without recourse, even on a full recourse loan.
Congrats Cara.
Occasional lurker, I guess it's my turn to come to the well for some advice. Moved to the area about 5 years ago, looked at housing prices, and once I finished laughing, have rented in the Pentagon City area since.
Have been very happy with the neighborhood and our apartment, so never seriously considered moving until... we now have a 1 year old kid, so are starting to think about trading easy access to restaurants and bars for lawns and neighbors whose names we know.
Though we could afford to buy in Aurora Hills and stay in the vicinity, it doesn't quite have the kids playing in the cul-de-sac feel that's currently dancing through my head.
Both work downtown near the Mall (so have become perilously accustomed to short commutes), can currently afford about the $700k's with 10% down (with sufficient reserves to take care of other transactional/moving expenses), so 20% down comfortably in that range would be a couple years away. Have only been informally looking so far, haven't contacted a realtor yet, but may be time to get serious this Winter/Spring.
Looking around the Beltway in VA: like some of the high end stuff in Kingstowne (though not thrilled about the schools, I know somtimes a contentious point here); some decent stuff in Vienna, though much of it older so poorer layouts and a worrisome commute.
Any other thoughts/advice as to where we should be looking (or any other helpful first-time buyer advice)?
jim: "Moved to the area about 5 years ago, looked at housing prices, and once I finished laughing, have rented in the Pentagon City area since."
LOL welcome. Yeah the "who coulda known" I hear from people that bought at peak is pretty laughable. Smart move.
Consider renting a house if it's way cheaper than owning one, which I'm sure it is. Don't buy into the NAR horseshit of "you need to own a home if you really love your children". You can rent any type of home, not just apartments.
I'm renting a 3BR house in Vienna for $1450/mo. Would cost me at least $400k to purchase. No-brainer.
I'm not saying "don't buy", but definitely look at the comparable rents in areas you'd like to live in. That could be an indication also of how much further prices there will fall.
Jim, Do you have a preference for FX or train service..sorry about butting in..VRE runs to/from Union Station where you can catch metro.
jim,
I would say you have three public transit options:
1) The current orange line:
In addition to Vienna, how have you liked the look of what people have been posting here on near the orange-line stuff in Arlington at the $600k point? I'm assuming stuff gets a bit better at the 700 mark, but people here haven't been targeting it.
2) The VRE:
How close would L'enfant or Union Station be to your work? Those bracket the Mall, so the VRE may be your best commuting choice.
http://www.vre.org/
If so this opens up Kingstowne (VRE at Springfield in addition to the metro). Burke in Robinson (for that price point you should be aiming for the Burke Center stop and Robinson/GMU not Rolling Road like me.) There are some really nice suburban houses at the 600-800 point in Burke. And for just a slightly longer ride you can get even more in Manassas or PWC.
There are nice new builds in "Fairfax Station" that seeps into parts of Burke.
(whatever you do avoid the mega duplexes they are building off Van Dorn, I really don't like how they've done the construction....)
3) A currently joint drive/metro commute that will be bettered by the silver line.
Reston is a nice place to live. And with the future public transit might be the best investment possibility if that matters to you. (conversely the place most likely to go up in property taxes if I'm correct about that).
jim,
But yes, Kevin's right. Especially if you want to test out the commute and how much you like an area first, looking into renting a house, or a nice townhouse would definitely be a smart move. In 2-3 years your kid will be close to entering kindergarten (day care costs diminishing) and you'll have 20% saved up. I recommend renting one of the awesome nice THs in Kingstowne proper, and enjoying the great commute while you don't have to worry about schools yet because you're not buying.
housebuyer, I'm aware of the g. depression but remember that few homeowners in that era are alive today--that was a condition in my post.
The oil downturns, being very localized, did not have nearly the national effect that we are seeing today. Most economists agree that today's house bubble bursting and recession are the worst since the depression. Since the article is talking about the numbers of homeowners nationally who are walking away vs. those in prior eras (among other points the author made) the appropriate comparison is not to localized trouble spots in prior eras but to the nation as a whole.
jim, I know that neighborhood pretty well. Are you living in an apartment or row house? If so, you may want to stroll the streets of the single family houses, particularly those south of 23rd St., further away from the metro and restaurants. While you won't find many cul-de-sacs, there definitely is a neighborhood, kids- playing feeling. The neighborliness is a great strength of that area.
Here are the closest neighborhood association websites, if you're interested.
http://www.aurorahighlands.org/index.html
http://arcaonline.org/
However, there aren't as many families with kids there as you will find in Cherrydale, for example, because the schools aren't perceived as being "as good" - largely I think because of the demographics of the kids who attend, which include kids from 22206 and 22204, which has more low income neighborhoods than does, for example, 22207. So if that is a concern for you, that is a reason not to buy in Aurora Hills.
jim, ps, probably the most useful info for you on those websites I indicated above is in the newsletters. Both civic associations linked to a November letter on their sites.
Cara,
RE: walkaways
We have all the examples we need in different pockets of our region and the demographics behind them.
Ace-
Sorry I missed the comment about alive. I agree there obviously has not been anything nationally like this for years. I didn't read the full article, but I was wondering if you could gauge peoples ethics by what they did in local markets in the past. Obviously the data is not reliable due to limited sample size.
housebuyer, good point.
jim -
Don't listen to the housing bears. They all missed the bottom in prices in Fall/Winter 2008 and they are bitter about it. They cling to their bearish ideas because they can't stand to admit to themselves that they were wrong. Several did avoid buying at the peak - '05-'07 and they will tell you about it again and again. The thing about timing the housing market is that you have to be right TWO times. Once to sell or not buy at the TOP and again to buy at the bottom. They all missed the bottom from what I've read on this blog, so they come up with kooky theories why prices will retrace. Keep reading this blog, they will slowly disappear once data point after data point come in confirming the bottom last year.
One really useful thing about this forum is the widely varying perspectives -- when chatting with my area acquaintances about housing, homogeneity among the group becomes a bit of a drawback.
I did want to quickly address the renting question. We have no aversion to being renters (as we've aptly demonstrated so far). We did consider moving further out and renting when we knew the kid was on the way to make sure "we could live with the commute". The drawbacks to that we saw were:
* If looking to rent a house, more limited stock. There were far fewer rental choices than purchase choices in the areas we searched.
* If renting an apartment or townhouse, we're building in an almost guaranteed additional move in a year or two, so not getting the benefit of it possibly being a place we could stay for years.
* Finally, we just sort of questioned the value. Unless we took years to try renting in half a dozen areas under consideration, do we really learn that much from a single spot check?
Not saying renting a house further out is out of the question, as mentioned previously, we've seriously considered it.
Ace -- currently living in an apartment above the shops in Pentagon Row. Spent a lot of time roaming the neighborhood north of 23rd and along Arlington Ridge. Much less familiar with South of 23rd. Will definitely take a look, and thanks for the web site links, hadn't seen those before.
jim,
I have friends that live in Kingstowne with their kids. My friend is a teacher at Franconia Elementary and her eldest son attends school there. What exactly do you not like about the schools?
Robert, STFU. The market responded how most of us thought it would with the first time home buyer's tax credit being offered.
You're the one with cockamamie pie-in-the-sky predictions about real estate in the region, based only on how you see the job market being strong here. Never taking into consideration the fact that prices were massively inflated under already-high job numbers in the region. You're just a one-trick pony, no different than the idiots during the housing bubble that warned "buy now or be priced out forever".
Considering also the kinds of loans being offered out there to pump up a market that clearly needs to correct much more, I don't see how somebody could be so bullish about the market without having their head completely jammed up their ass.
Jim-
The rental stock is actually pretty significant in most areas. You can find a ton of places on craigslist if you haven't already looked at it.
As one of the more moderate people here (and I think the only one person who correctly called the bottom the month that housing turned, contrary to Roberts comment). I would say you are probably fine either way. I expect housing to fall another ~10% in the inner areas and then stagnate for many years. The reason why buying now may be ok is that low interest rates now will make your payment the same as paying 10% less with a higher interest rate.
So as long as you are not overly worried about the exact value of your place you should be fine buying now or waiting. I am pretty sure the 700K market is still fairly frozen in a lot of areas so if you can find a desperate buyer you may be able to get a good deal.
jim,
I don't think anyone was seriously suggesting you move every year for 4 years until you find a neighborhood you like... That would indeed be insane.
In order to figure out where it would be worthwhile to rent, you also have to figure out where it would be worthwhile to buy. You really want to have picked your general market in advance. But it was indeed immensely easier shopping in Burke from Kingstowne than it would have been from Rockville, so it all depends on how far your target market is from your current home.
Are you month-to-month now? I would say that's a goodish reason not to move and incur another 12 month lease if you're fine with putting down 10%. Being able to act and move on a house whenever the right one comes up is key to your sanity and to getting what you really want.
I think you really won't know whether renting longer is the right option until you're out there and looking at what's available. If what's available isn't living up to what you want to live in long term, then you can look seriously into rentals in the area while amassing more funds. And in fact that's a good sanity check when you start getting serious too, why by X when we could happily rent Y?
But I think these comparisons are a bit different in your price range than they are in mine.
Robert,
Simple lesson in history, economics and math - home prices follow inflation at best (reason I say at best is because they do deteriorate unless kept up-to-date) What makes this even worse is that we are in a deflationary environment - Japan is a good example to follow as they have been through similar asset correction since over a decade.
Real estate has gone too far too fast early part of this decade. You will have hard time finding an economist who truly believes housing has bottomed nationally yet - let alone in this region where it has ways to go. Nationally, it has easy 20% to go further.
In any case, time will tell as it always does. MoM price declines will start very soon as you will see...
Ive been dissecting the latest census results and found a few things some of you may find interesting.
For most of the decade, the DC area has been doing better than the US in median income growth, and this year is no exception. The most recent median household growth from 2007-2008 was as follows:
Arl +7.0%
Alex +9.4%
Ffx +4.2%
Lou +5.7%
PWC +3.7%
As with most of the decade, Arl & Alex outperformed the rest of the area by a wide margin. This growth is exceptional for "mature" counties which typically have more restrained growth like fairfax. Its usually only in the "fast growth" counties (i.e. Loudoun) that you see above average growth.
Also interesting, with the exception of PWC every area exceeded their 2000-2007 annual avg growth rate by a decent amount (Arl & Alex usuallty see about 5% growth a year - the other three see about 3.5% a year).
Im not sure what to make of the above average income growth this year. As is typical, the number and % of people in the top 3 income categories grew but no more so than nomral.
My guess is the bottom categories shed even more people than normal, but im not sure. So it could be this is the effects of the recession which (paradoxically) gives the region above average median income growth, but not in a good way.
POPULATION GROWTH - population growth shifts were also interesting. For the first 7 years of the decade, the annual increase in population was as follows:
Arl +0.9%
Alex +0.9%
Ffx +1.4%
Lou +6.7%
PWC +3.3%
Again, you can really see the difference between the "mature" built out Arl, Alex & FFX vs the fast growth Lou & PWC.
Most often, during a recession, the rate of growth in any given area slows. This would be especially true this year as many people are trapped in underwater homes. So what did the growth rate do in the most recent year?
Arl +1.5%
Alex +1.5%
Ffx -0.4%
Lou +4.2%
PWC +1.7%
The outer 3 areas really took a hit and their rate of growth slowed by a decent amount. By contrast, beat their long term averages. However, the one real standout above appears to be fairfax with what (to my knowledge) is the first time it has dropped population in decades.
IMHO, this is not yet a cause for concern. While the # of people in FFX dropped, the # of households increased. This could be a sign of the increased urbanization of FFX as urban areas typically have less people per household (i.e. children) than suburban areas. Still, to see the flagship county in the NOVA area to post a negative number is shocking and something that should be watched carefully.
Spider-
Not to nit-pick, but I would say housing has to do with wage growth more than inflation. Generally these numbers are pretty close so the net result is the same.
So the problem is that even though I agree with you that local housing may be overvalued significantly, I don't think it will fall significantly. My guess is that it will just be flat for the next 5-10 years while inflation does its part to bring housing back to reasonable levels.
I commented about why I think we are different than Japan a couple of days ago so I don't want to get back to that argument.
Sorry - that should be
"By contrast, ARLINGTON & ALEXANDRIA beat their long term averages."
CRT,
thanks for the numbers as always.
Those income growth numbers are amazing for 2008. Not what tbw expected at any rate. Although it is possible that as you pointed out, it's some perverse impact of the mixture of people who are losing employment.
You will have hard time finding an economist who truly believes housing has bottomed nationally yet - let alone in this region where it has ways to go.
Uh
housebuyer - the only problem with that theory is that inflation can't eat much away as quickly as one would think - given the lackluster growth and continuing weak economy - this will make inflation subdued for quite a while.
Many huge investors are still piling into T-Bills at negative nominal rates - read between the line - deflation to continue....
Robert - Good luck trusting the
National Association of Home Builders thinktank!!!
Crt..For PW to post a gain with the amount of homes lost to foreclosure and our illegal immigrants moving to Fairfax and Montgomery County..I'd say those figures bode ill winds for Fairfax..now, just my opinion. I do know we have picked up a substanial number of new neighbors from Md, DC, Loudon, Fairfax and Pa...so much so I didn't have a clue how this last election would play out.
Unfortunate - but true - DC just hit new unemployment record - 11.9%
http://www.cnbc.com/id/34047356
Jim, If you want a high end home well worth 800-900 for 600..check out Clifton. Its beautiful..really beautiful pieces of property and you can get to a VRE station quickly.
kevin,
One, I have the US Government on my side. Two, I have plenty of experts that I line up behind. Three, prices are increasing.
What do you have? Conspiracy theories and insults.
Shall we go back to the end of the foreclosure moratoriums?
Do you really think you can WAIT out the Fed, Treasury, WH, and Congress?
Face it, you missed it kev. The bottom is in.
spider,
One of those experts is Ivy Zelman the originator of the Credit Suisse option-arm tsunami chart.
The builders are actually looking for honest good recommendations of where it will pay off to invest now. This is not stuff they give out in marketing their houses.
spider -
I encourage you to investigate Ivy Zelman further. You will find she is anything but an uber-bull on housing. Some would say bearish.
Here's what she says about NOVA:
Zelman is bullish on the development-friendly Virginia side of the Washington, D.C. market, less so on the Maryland side. She recently released a report on D.C. saying its “fundamentals are among the best in the country. It is well positioned for sustainable recovery given incremental job growth and land constraints.”
kevin would say she has her head up her ass.
Here is what she says - that's not bullish by any stretch of imagination as you said:
Ivy Zelman: “Home prices are going back down” - Nov 20 2009
Again, it is hard to believe NoVA can be immune to this - when it hasn't been the case in last 2 years if you noticed...
Robert, your link does nothing to counter the quote about the region having bottomed. It talked about the sustainable economic soundness of the region, and said nothing of a market bottom. The market bounced as soon as the first time homebuyer's credit appeared. Don't you think that's more than a coincidence?
I'm not concerned about missing a bottom. Worst case is that I will buy on its way up. I'll be sure to rub it in your face too when the prices start plummeting again. A bit of a premature celebration you're having. You have long since proven that you don't understand market fundamentals, so it isn't surprising.
Robert: "kevin would say she has her head up her ass."
No, I'd say that she has to help them decide where to build and for understandable reasons has chosen this region. Individual buyers are not home builders. There is personal risk involved no matter what the market. This is about me or someone else buying an overpriced house NOW that will be worth much less in six or twelve months. If you can't distinguish between a company choosing a region where to build houses in the future versus an individual deciding to purchase a house today, you're a fucking idiot.
CRT -- nice post. Did you happen to look into demographics to see if the inside the beltway gentrification continues? Although if the rate of growth jumped from 0.9% to 1.5%, I think the answer would be yes.
Spider -- these are not your typical NAR permabulls who Robert quoted. John Burns has been a bear for a long time. Ivy Zelman created the "Alt A reset chart of doom" that has been driving Contrarian wild. These guys are still bearish nationally yet they have DC as the #1 and #2 best performers out there.
Also among economists who see bottom, include Tom Lalwer who created the "flip chart of doom" for Fannie & Freddie years ago, but thinks NOVA has bottomed. Also include Dean Baker who warned of a bubble years ago, is still nationally bearish to this day, yet, quietly bought a house here in the DC area a few months ago...
Spider-
There were only negative nominal yields on treasuries for a day or two at the bottom of the market. I am pretty sure they have not been negative since March. The yield is currently 3.36 for the 10 year, while the inflation indexed security is 1.16 implying the market things inflation will be 2.2%/year for the next 10 years.
This is the market rate, so obviously some people think it will be higher and some think it will be lower, but at 2.2%/year houses will be fairly valued in a decade.
housbuyer -
yes, it happened in dec '08 and again happened yesterday:
Some Treasury Yields Turn Negative
housbuyer - it seems we have similar views on housing fundamentals. However, you seem to believe in economy getting better - I feel the other way.
As you know, this two diverging views would play out differently.
housebuyer - some short term T bills did go negative the other day.
Calculated risk has an article on it.
http://www.calculatedriskblog.com/2009/11/on-negative-t-bills.html
In his view, its a bit of an anomaly and overall a non event.
Spider-
Thanks for the article I don't really pay much attention to short term treasuries so I hadn't noticed that. I also agree it looks like we have similar beliefs on housing.
Although financially I will probably do better under your scenario, I hope my scenario happens. I would be much happier paying slightly more and having the country healthy again.
housebuyer -
For long term health of our economy to get better - downturns are critical in that they remove excesses and leverage - as well as direct the investments in correct sectors.
Else, we will have the problems linger for longer period. Unfortunately there is no quick fix to years of credit bubble...fed might have you believe otherwise - topic for another day.
My 2 cents for what that's worth.
Well, I happen to think that hiring will pick up when the health care decision is made. I'm not mixing business and politics, they mix themselves. When industry decides whether President Obama was elected on personality or politics, they will be vary cautious with an activist, democratic president with majorities in both houses. Its starting to appear his election was more personality than platform.I really thought we would be at 12% unemployment in Dec 09 and wrote it to my family.
came across the following on another board i frequent, don't know if it's true, but thought some might be interested:
"I have delta sky miles, and I found my agent through a program of theirs where you can pick a big brokerage (i.e., Long and Foster, Weicherts, ReMax(?), etc.). I found someone from Long & Foster. Same service you would ordinarily receive, and same commission, but I also received over 400,000 sky miles. 3 first class trips to Europe later it was well worth it ..."
MM, I had no idea! Here's a website I found:
Delta Real Estate
Looks like you can earn skymiles by getting a mortgage through their search as well. Interesting.
The market bounced as soon as the first time homebuyer's credit appeared. Don't you think that's more than a coincidence?
Never said it didn't, but that was one of many things going on. Are you saying the Fed buying up MBS's had nothing to do with it? And what about low prices? If prices were still at bubble peak, do you really think buyers would have rushed out to purchase just because of the $8k?
You have long since proven that you don't understand market fundamentals, so it isn't surprising.
I've said jobs and incomes are the fundamentals? What are they to you?
No, I'd say that she has to help them decide where to build and for understandable reasons has chosen this region.
I doubt you will, but please elaborate on "understandable reasons." I have a funny feeling it's going to read like some of my posts.
Robert said...
"Never said it didn't, but that was one of many things going on. Are you saying the Fed buying up MBS's had nothing to do with it? And what about low prices? If prices were still at bubble peak, do you really think buyers would have rushed out to purchase just because of the $8k?"
Probably not, though it would certainly have made a noticeable impact no matter where prices were. But again, pull all these temporary stops out of the bubble bucket and it will fall, guaranteed.
"I've said jobs and incomes are the fundamentals? What are they to you?"
They're fundamentals, for sure, but that doesn't mean you understand how they transcend into a market of potential buyers. First off they have to be able to afford the houses. Most people in this area that could own already do. Many of those my age are stuck underwater and won't be buying again for a decade. First time buyers don't have down payments, hence this awful tax credit.
Just saying, under normal and sane market conditions and higher rates, prices would tumble in the region.
"I doubt you will, but please elaborate on "understandable reasons." I have a funny feeling it's going to read like some of my posts."
It would probably sound like your posts, minus the baseless assertions that this will prevent prices from falling to sustainable levels. Jobless numbers are exacerbating certain markets, particularly in Vegas and CA. This along with foreclosures caused their markets to correct fast, or potentially even overcorrect. Lacking these tools of price discovery, the decline will be spread out over a longer period. Creating a bunch of $50k/yr jobs in the area isn't going to do much when the median house costs four times that amount.
I've never contended with the fact that our local economy is doing far better than the nation's. Hence, I agree with her assessment and would plan to build here in the future before anywhere else. But those are long-term projections, and frankly I think it's stupid to be building more houses at all, but I know these people have to feed their families.
I contrast that heavily with the decision of someone in this area deciding to buy this very second. The two don't even come close to comparing. I'm not at all bearish about the long term in this region. Like I've stated before, somebody buying a house in PWC this year is going to be clear and fine down the road. My issue solely is with your declaration that we're at a market bottom, despite the ridiculous market manipulation going on.
Sorry, make that six times their $50k salaries.
thought about putting a bid on this REO. would've lost. it needs minimum $50K of reno in addition to any inspection items .
sign. i'm still $$$$ away from market reality.
contrarian -
I know where you stand. I just thought you were agreeing with what was recommended in that article.
"Contrarian said...
Robert,
I'm a contrarian."
Thats a good point Robert. Contrarian is the ultimate contrary indicator.
Recall that the day Contrarian choose to admonish MM for not selling ALL HIS STOCKS was right before one of the biggest stock run ups in all history.
So as long as Contrarian keeps glug glug glugging his doom aid about a deflationary collapse (dow 400, homes in DC area bottoming at $50K) you are all right.
However, the day Contrarian wakes up and says "gee the dow might not hit 400 and DC area homes may not bottom at $50K" run like hell!!!
"Contrarian said...
If you are going to allege I said something, then provide a link, because you make sh*t up out of thin air. I never said the things you allege, in the context you are repeating them."
Ok Contrarian, you want proof - here you go. On March 5, 2009 @ 12:12pm on this blog MM said...
"just wanted to add this here. perhaps soon home buying will no longer be on my mind...
Dow 6,652.19 -223.65 -3.25%"
Now, that same day at 4:47PM you responded to MM and said:
"Are you surprised?
I guess denial is a wonderful coping tool, eh MM?
BTW, the Dow was up around 9000 at that time.
Others also suggested I was way off base.
The question now, is:
At what point, if ever, will TedK, The Anonymous, MM, etc., accept the obvious?
And, if for some reason it has not become obvious, why not? :-)
Have you all thought about starting a 12 step program and calling it A-D-D Anonymous?
Members would include those who chose to simply sit there during the greatest collapse of wealth in history and watch their Assets Deflate Daily.
Sad, but true. So sad. People choose to be victims, martyrs, instead of dealing with life on life's terms. Truly amazing."
Heres the whole thread so you can see MMs statement at 12:12, and your blistering response at 4:47 PM. Yourself
https://www.blogger.com/comment.g?blogID=4787878578920468587&postID=141772809946587924
So there it is Contrarian, MM marveling about the extent of the collapse to date, and here you are chastizing him, saying he was in denial, and should be in a 12 step program Assets Deflate Daily (ADD Anonymous)...
So you tell me Contrarian, what EXACTLY were you trying to convey to MM that day???
The Anonymous,
I do not share contrarian's views on economy but i think he wanted to show that asset prices can go down a lot. I do not think he is good at stock picking or whatever, but he was not indicating that stocks will drop even more and now (in March) it is a time to sell --- just that it was a good time to sell when dow was at 9000.
I also wonder why don't you buy a house now?
Cara said
Those income growth numbers are amazing for 2008. Not what tbw expected at any rate.
Did I make such a prediction? I don't recall. It took us until 2003 to see lower median HH income from the 2001 recession.
Robert said
hey all missed the bottom in prices in Fall/Winter 2008 and they are bitter about it.
I have not seen any homes on sale in the Oakton/Vienna/Fairfax area that are more now than they were in Fall/Winter 2008. In fact, everything seems to be a lower price. I don't follow Great Falls closely but I'm also pretty confident that your area also is less expensive now than Fall/Winter 2008.
I think what you meant is a neighborhood in Manassas Park no one on this blog would have felt comfortable walking around at 2 AM by themselves and was 80% foreclosures cost less in Fall/Winter 2008 than now. I agree with that. I don't agree though that the areas most of us are looking at are more expensive now.
tbw,
Come on, you can't be serious? Manassas Park is the only area where the bottom has come and gone? You should get out more or at least qualify your statement.
The best deals under 350K have come and gone. Many other deals (reo's and shorts) at far higher prices won't be seen again. If you insist on an "organic sale" in turn-key condition, then you will pay market (whatever that happens to be).
So again Contrarian, what were you suggesting that MM do -- that faithful day right at the bottom for the dow?
--For example you said...
"The question now, is:
At what point, if ever, will TedK, The Anonymous, MM, etc., accept the obvious?"
How would we "accept the obvious"? What action should we have taken with our assets if we "accepted the obvious"?
--Later you say:
"Have you all thought about starting a 12 step program and calling it A-D-D Anonymous?
Members would include those who chose to simply sit there during the greatest collapse of wealth in history and watch their Assets Deflate Daily."
How would we become ex members of your A-D-D Anonymous? What would we have done with our assets to no longer be members of A-D-D Anonymous?
-- Later still...
"Sad, but true. So sad. People choose to be victims, martyrs, instead of dealing with life on life's terms. Truly amazing."
What would we do to not become "victims"? What were you suggesting we do with our assets to "deal with life on life's terms"?
Lets see if you can give us a direct answer -- I suspect not...
Va_Investor,
I did not say Manassas Park was the only place that had bottomed. I was giving an example.
Again, I reiterate that the places most of us are looking at have neither bottomed nor gone up in price.
The SFH neighborhoods I'm looking at were in the $250s-400s in 1999 and were $500s-800s in 2006-07 and now more like $450-725k. I've yet to see anything go back up.
I second TBW (probably since I'm looking at the same areas, and tracking the same homes and prices). Nothing is more expensive now than 6 months ago - and many things that were delisted have come back on with a starting price equal to their lowest list before.
VA_investor, I track most zips in Arlington in a middle price range, plus a few in Alexandria City and Fairfax Co. I mention the range because it is relatively less affected by the new buyer bribe. NONE of these zips are higher than they were 6 months ago. You can also check it out with MRIS data (looking by zips). They have been declining slowly or in some cases look somewhat stable but with too few sales for me to have much confidence. Clearly these areas benefit from the demographic shift that CRT has beautifully documented; otherwise the declines would be greater, I think.
I think we're still at a seller's "I'm not giving my house away" standoff, and since interest rates are about as low as they can go, unless there is a rapid turnaround in the economy, and another bribe for higher income people than are now eligible, it appears to me that the only place prices can go is steady or down.
ps - I should have specified that I am referring to SFH, not to condos and townhouses, and to my range of interest within the zips, not to the zips as a whole.
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